Priyanka Golikeri , Daily News & Analysis (DNA)

Bangalore, March 7, 2012

There was a time when ready-to-eat and ready-to-make edible products relating to India’s traditional cuisine were available only at neighbourhood provision stores. Now, they are careening their way into ultra-modern supermarkets / hypermarkets across India, as if to give company to Western foods like Dutch Gouda and Edam, and the Italian Parmigiano.

Take the Big Bazaar at Malleswaram in Bangalore for example. Right opposite the entrance, a wheel-cart, emblazoned with the Hinglish term “Banana Mandi”, sells traditional bananas like yalakki (yellow-skinned finger-sized bananas), nendran (big- sized plantains used in making crisps), red banana and poovan (small-sized). This mandi (Hindi for market) is run by the husband-wife couple Baburaj and Jyothi.

Four paces ahead, another kiosk — it is operated by Bhagyalakshmi Butter and Gulkand Store, a popular Bangalore outlet of 1953 vintage — sells bottles of syrupy-sweet gulkand (dried rose petal jam). Next up: a 30-square-feet kiosk run by Murugan Ghee and Butter, another well-known local store of 60 years’ standing,now peddling avakai (spicy mango pickle of Andhra Pradesh), puliogare mix (tamarind-and-lemon-flavoured rice), gongura pacchadi (herbal pickle), bisi bele bhaath (rice savoury) and vangibhaath powders, all stocked in transparent glass jars.

Step out and saunter a few hundred metres across to the Spar Hypermarket. A similar sight greets you. Glass jars laden with murabba and chunda (both mango pickles), pudina (mint) and putani (fried chana dal) chutney powders enliven the food section. Trays full of nipattu (disc shaped crispy snacks), dink (edible gum) laddoos, and sakarpare (flour and sugar snacks) jostle for space.

There is a simple reason why mega-retailers stock traditional Indian food. It expands the customer base and builds loyalty, say retailers. And by absorbing well-known local stores into their fold, retail chains hope to ensure goodwill. Good PR, if you will.

While some neighbourhood vendors open kiosks within retail outlets, others supply their food items to retailers who then display them beside FMCG mainstays like noodles, chocolates and biscuits.

Thus, the outlet becomes a destination for wide-ranging grocery from pickles to international foods, says Venkateshwar Kumar, Big Bazaar’s vice-president in charge of south India operations. Gaurav Gupta, director, Deloitte India, says that local food items act as an additional product category for existing customers while bringing in new customers.

Furthermore, with the growing number of migrants in metros, outlets look to provide a “taste of home”, says Devangshu Dutta, CEO of Third Eyesight, a consulting firm. “This extends market share as new shoppers are targeted,” says Mohit Kampani, chief of merchandising and operations, Spencer’s Retail.

At the Spencer’s outlets, which vary from 2,000-50,000 square feet in size, the food-and-beverages (F&B) section occupies 60% of the floor space. Local fare like mathri (spicy and savory crackers), pinni (sweet dish from wheat flour), tapioca chips and sorpotel (non-vegetarian delicacy) started treading in over a year ago. “This is already making 3% contribution to the overall F&Bbusiness,” says Kampani.

Likewise, at Spar, F&B is a key category covering nearly one-third area in hypermarkets measuring 50,000-60,000 square feet, says Ponnu Subramanian, senior vice-president, merchandising (foods). “Traditional items are stocked on different shelves across the section.”

For local vendors, on the other hand, a presence within modern retail ensures wider reach. Since opening a 120-square-feet kiosk at Spar two years ago, U S Mahendar, managing partner of Hatti Kaapi, a chain serving South Indian filter coffee and snacks like bisi bele bhaathand khara bhaath, has seen a 40% growth in business each year. “Hypermarkets guarantee footfalls,” says Mahendar, adding that their Rs7-8 pricing for a cup is “minuscule” in a mall set-up and helps in pooling people.

Today, the Hatti Kaapi kiosk sells an average 1,500 cups on week days; the count zooms up to 3,000 on weekends.
Jyothinathan, who mans the Murugan Ghee kiosk, says monthly sales always exceed Rs10 lakh, with the average bill per customer exceeding Rs200. “The footfalls are about 500 on week days and double that on weekends.”

It’s not hunky dory all the way. Local vendors say often the rentals at retail chains are exorbitant and prevent their entry into newer malls. Going to every big retailer is not viable, says Mahendar. Why? Some retail chains, he says, demand a 30-40% share in profits “which is impossible for players like us who sell each cup for Rs7-8.”

For retailers, sourcing local food items has its own set of challenges. Traditional food processing industry is highly fragmented, say experts, with 75% of the units belonging to the unorganised sector. Moreover, some units neither have trained manpower nor clean manufacturing facilities to generate quality produce.

“This makes procurement of products tough. We have a team of trained manpower who visit and give guidance on food quality and new product lines,” says Spencer’s Kampani. Kumar says Big Bazaar has tie-ups with specialists in community food from where they source the products. “Most products are sourced locally which helps in keeping costs to a minimum. We also stock products from women entrepreneurs,” says a spokesperson from Bharti Retail which operates Easyday (neighbourhood stores) and Easyday Market (compact hypermarkets).

The Times of India

Bangalore, March 5, 2012

Prepaid cards have become the latest retail tool to keep consumers hooked to brands. They offer convenience and safety, because customers don’t have to carry cash, and they often come with a variety of offers , including discounts.

Brands like Cafe Coffee Day, Pizza Hut, Provogue, Kaya, Fastrack, Gili and a host of others have launched prepaid cards. A prepaid card works like a debit card with a PIN number that can be redeemed at the brands’ outlets. The cards in India are based on the closed loop model – that is, they can be redeemed only at the brand’s stores. "When I have money loaded on the card, the tendency to come to the same place is higher," says K Ramakrishnan, marketing president at Cafe Coffee Day. The brand’s card Cafe Moments , launched this month, offers a 5% bonus on cards with a value of Rs 100 to Rs 499, 7% on Rs 500 to Rs 999 and 10% on Rs 1,000 and above.

A prepaid card obviates the need to pay cash every time, and it also enables faster accumulation of bonus points or other offers . Prepaid cards in India are currently being used more as gift cards. Some brands have used it to launch a promotion or a service. What the prepaid gift card did for Kaya was to generate incremental walk-ins ," says Suvodeep Das, marketing head at Kaya Skin Clinic. In Kaya prepaid cards, currency can be reloaded in multiples of Rs 500 to up to Rs 2 lakh. Kaya sells about 250-300 gift cards a month.

Global Prepaid Exchange recently estimated that the size of the organized prepaid gift card and gift voucher market in India is Rs 2,000 crore and would grow to Rs 8,000 crore by 2015. "The acceptance of gift cards in proportion to vouchers has increased significantly," says Pratap T P, chief marketing officer at QwikCilver Solutions , a provider of prepaid card solutions.

However, Devangshu Dutta, CEO of retail consultancy Third Eyesight, says growth in prepaid cards would be restricted by the fact that they can be used only at a particular brand’s outlets. "Also, a customer cannot claim the minimum residual value in the card. He will have to top it up to redeem it," he says.

Sarah Jacob , The Economic Times

Bangalore, March 2, 2012

Apparel and home products retailer Marks and Spencer’s has appointed Venu Nair as head of its India operations, replacing CEO Martin Jones who is moving back to the parent company.

Nair takes charge as managing director, the London-headquartered company said. Sources said Jones was moving back for personal reasons. Nair was head of sourcing for the £9.7-billion British retailer in South Asia and director of buying operations for India.

M&S operates in India through Marks & Spencer Reliance India, a joint venture with Mukesh Ambani-led Reliance Industries, selling clothes and home decor but not its food products. It has 24 outlets across the country.

"Unlike an expatriate, Nair would have stronger understanding of the Indian market and his being involved directly in sourcing will play to his strength," said a senior executive of a rival firm. M&S has been to work towards sourcing 70% of its merchandise from India and Jones had been driving this change.

"While other international companies look at India as an interesting and emerging market, M&S clearly identifies India as a market of importance," said Devangshu Dutta, chief executive of management consultancy Third Eyesight.

Shilpa Phadnis , The Times of India

Bangalore, February 24, 2012

Homemakers are likely to love this – someone cutting vegetables for them for free, someone making chappatis for them, again at no charge.

It’s the latest from Future Group’s value retail chain Big Bazaar. They call it the Seva initiative, and the store at Rajajinagar in Bangalore has become the first to launch the services.

Customers in the store can choose from a combination of different grains that go into making a dough, and the store staff will then grind, knead and make it into fresh chappatis. The promise is that the entire process will take no more than 12 minutes. Customers can go to the vegetable counter and get the vegetables sliced and diced in different styles for free.

The ‘sevaks’ at the 1.3 lakh sft store will assist customers in availing free after-sales service for the electronic goods they purchase or in identifying a vendor for dry-cleaning their carpet. The store even has a Bangalore One counter where they can pay electricity or phone bills, and avail other public services.

"We don’t merely want customers’ share of wallet or mind. We also want their heartshare," said Ashni Biyani, director of Future Ideas, the innovation and incubation cell of the Group.

The retailer incurs additional costs to deliver these free services. But analysts say the cost is mostly related to labour. "This is a clever strategy to attract customers at relatively low-incremental costs," said Hemant Kalbag, partner at consultancy firm AT Kearney.

Usually, the cost attached to delivering a service gets embedded into the product. "But free give-aways along with experiential marketing become a hook for customers, which could potentially translate into a higher billing size at the counter," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.

The Future Group has both internal and external pressures to try and find innovative ways to build a more robust business. External pressure comes from Big Bazaar’s competitors like Spar Hypermarket, which offers a better ambience and attracts more upmarket customers. Big Bazaar has been upgrading its stores to enhance customer experience, and Seva can be seen as part of this. "Big Bazaar stores launched in the last one year are less chaotic and resemble a Spar," said an analyst who did not want to be named.

Internal pressure for the Group comes from its huge debt of about $1 billion and high interest cost, which has impacted profitability. The retailer is working on a plan to turnaround its retail operations. It is exiting some of its non-core businesses and shutting down loss-making stores. It has closed five Food Bazaar outlets and 11 E-Zone stores and has laid off 3,000 people in the recent past.

To cater to more evolved customers, the Group is rolling out FoodHall, a food store for value-added food products and international food ingredients. The Seva initiative will be rolled out to 12 Big Bazaar Family Centres in the next two months. The Family Centre sub-brand makes customized product and service offerings based on the needs of the people living in and around the catchment area.

Meghna Maiti, Financial Chronicle

Mumbai, February 22, 2012

Kishore Biyani, whose proposed licensing and distribution venture (JV) with US footwear retailer Skechers fell through last year, has revived partnership plans with the foreign firm. It has even seconded one of its senior most executives Sanjeev Agrawal previously joint CEO at Future Value Retail as CEO of the proposed JV.

“The group is in the process of signing a JV agreement with Skechers and Agrawal will head this venture,” said at least three company officials in the know of the development. Future Group already has a 50:50 joint venture with UK-based footwear brand Clarks which is steadily scaling up.

“The footwear segment is seeing evolution in terms of product mix, pricing and demand growth, helped by the availability of international brands,” said Devangshu Dutta, CEO, third Eyesight, a consulting firm focused on retail and consumer products sector.

Earlier Future group had tied up with Liberty Shoes in a joint venture that was scrapped because of poor customer response. India is one of the strategic markets for Skechers and the company is said to have done good research over the last three years to establish the right strategy and partnership to develop the brand in India.

An email sent to Kishore Biyani, group CEO at Future group on February 20, 2012 seeking comments on the Skechers JV did not elicit any response till the time of going to press. Sanjeev Agrawal, ex-joint CEO at Future Value Retail said, “No comments.” Skechers USA in an email said, “Your email has been forwarded to the appropriate department for review.”

Purnendu Kumar, vice president at Technopak Advisors said, “The growth opportunity in the footwear segment is very high primarily because of low penetration in terms of point of sales, number of brands. There is pent-up demand in the market. Growing affluence is also driving demand in this category.”

Skechers USA, incorporated in 1992, designs and markets Skechers-branded lifestyle footwear for men, women and children under several lines such as those for shaping up, running and walking. The over $ 2 billion Skechers had signed a deal with Pantaloon Retail in the year 2009 to licence and distribute Skechers footwear and apparel in India. The deal involved Winner Sports, a wholly owned subsidiary of Pantaloon Retail India (PRIL) as the licensee and distributor of Skechers footwear and apparel through Future Group’s retail format Planet Sports.

The market for premium shoe products is growing at 15-20 per cent annually, according to Technopak Advisors. The growth potential has prompted several firms to enter the market in the past few months. Tata global trading arm Tata International started its chain of stand-alone stores, Tashi, targeting the segment late last year. Reliance Retail has entered into a licence dela with US-based Timberland.

Future Group’s other footwear JV Clark, has five standalone stores and around 10 shop-in-shops across India. “This venture will take two years to become profitable and it’s now in scale-up mode. By the end of the next financial year, we are confident that cash accruals from existing stores will be able to take care of the growth requirements of the lifestyle footwear, bags and accessories joint venture,” said a top Future group official involved with that business